The Koi Manufacturing Company produces finished products within two days of the receipt of raw materials. Inventory accounts consist of raw materials, work in process, and finished goods. All manufacturing costs are charged to the cost of goods sold account. At the end of each month, all inventories are counted, their cost components are estimated, and inventory account balances are adjusted. The attached information is a summary of selected transactions and other information for the month of June.
(a) Beginning balances in the inventory accounts are provided below. These need to be transferred back into Cost of Goods Sold at the beginning of the month. Raw Materials Inventory $ 40,000 Work in Process Inventory 1,600 Finished Goods Inventory ($260,000 is conversion cost) 370,000
(b) The June 30 work in process consisted of the following, based on a physical count. Work in Process ($29,000 is conversion cost, 50% of the raw materials charged have not been placed into production) $ 47,900 Finished Goods Inventory ($200,000 is conversion cost) 360,000
(c) The following transactions took place during the month. (1) Raw materials purchased on credit, $850,000. (2) Indirect materials used cost $13,000. (3) Gross payroll of $400,000 is accrued and then paid. (4) Payroll distribution was as follows: direct labor, $60,000; indirect factory labor, $120,000; sales salaries, $130,000; and administrative salaries, $90,000. (5) Actual manufacturing overhead costs were as follows: depreciation expense, $668,000; insurance expense, $13,000 (all from prepaid insurance); and miscellaneous manufacturing expenses, $83,000 ($54,000 paid in cash, the remainder purchased on account). (6) Manufacturing overhead is applied at a rate of 110% of direct material cost put into production during the period.
REQUIRED:
(1) Prepare the general journal entries, in proper form, to record the transactions for the month. Use the number and/or letter of the transaction as the date. Omit explanations.
(2) Prepare the adjusting general journal entry, in proper form, at the end of the month to backflush the appropriate costs to the appropriate inventory accounts.